NY Fed: Tough July Gives Consumers Sour Outlook On Jobs, Finances
Consumers in the United States began to feel a bit more pessimistic in July about their prospects, in the latest sign that the recovery from the coronavirus downturn may be losing steam.
In its 2020 “Survey of Consumer Expectations,” the Federal Reserve Bank of New York reports that consumers across the country felt a bit less confident in July about their employment prospects and financial situation in the year ahead.
“One-year-ahead expectations about households’ financial situations deteriorated, with more respondents expecting their financial situation to worsen and fewer expecting it to improve,” the New York Fed noted. “Both perceptions and expectations of financial conditions remain weak compared to pre-COVID-19 readings.”
The lowered expectations come after two months in which consumer sentiment rebounded following a steep contraction in business activity amid the coronavirus lockdown measures of March and April.
In particular, consumers grew more worried about losing their jobs in July than they had been a month before, with 16 percent reporting that they were likely to lose their jobs in the next year, up from 15 percent in June.
That’s compared to 13.8 percent who were feeling the same way a year ago in July of 2019. It was offset slightly, though, by a small increase in respondents’ “mean perceived probability” of finding a new job should they lose their current one, which rose to 48.9 percent in July, up from 47.6 percent in June. Still, that was far below the nearly 60 percent who felt confident back in July 2019 of finding another job should they lose their current one.
On the flip side, workers are also hunkering down amid an uncertain economy. The “mean probability of leaving one’s job voluntarily” in the next year came in at 18.9 percent in July, a couple of points below the 2019 average of 21 percent.
The availability of credit also appears to be tightening, with responses to the survey indicating “reduced credit availability compared to the pre-COVID-19 levels,” the New York Fed reported.